B e f o r e :
HIS HONOUR JUDGE PETER COULSON QC
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Between:
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IAN McGLINN
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Claimant
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WALTHAM CONTRACTORS LTD
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First Defendant
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HUW THOMAS ASSOCIATES
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Second Defendant
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DJ HARTIGAN & ASSOCIATES LTD
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Third Defendant
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WILSON LARGE & PARTNERS
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Fourth Defendant
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- No. 3 -
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Mr A Williamson QC & Mr J Selby (instructed by Speechly Bircham) for the Claimant
Mr A Bartlett QC & Mr G Hamilton (instructed by Freeth Cartwright) for the Second Defendant
Mr J Whitting (instructed by Beale & Co) for the Third Defendant
Mr C Reese QC & Mr A Warnock (instructed by Philip Barnes of P.I. Brokerlink) for the Fourth Defendant
The First Defendant did not appear and was not represented
Hearing dates: 16, 17, 18, 23, 24, 25, 26, 30, 31 October
1, 2, 6, 7, 8, 9, 13, 14, 15, 16, 20, 21, 29 and 30 November 2006
8 February 2007
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HTML VERSION OF JUDGMENT
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Crown Copyright ©
His Honour Judge Peter Coulson QC:
A. INTRODUCTION
- This action concerns a house called 'Maison d'Or' that was built for the Claimant, Mr Ian McGlinn, in St Aubin, in Jersey. The house took three years to build, between January 1999 and December 2001. Following the departure of the building contractors in January 2002, when the house was substantially complete, it sat empty for the next 3 years whilst the alleged deficiencies in its design and construction were the subject of extensive investigation by a team of experts and contractors. In the early part of 2005, it was completely demolished. It was never lived in. It has not been rebuilt.
- Mr McGlinn was, until very recently, the co-owner of The Body Shop group of companies, when he sold his shares for in excess of £100 million. At times during the unhappy story of Maison d'Or, Mr McGlinn's wealth has resulted in events and decisions which would not even have been contemplated by employers of more modest means. As he agreed in cross-examination, his wealth allowed him to take legal and financial risks which others could simply not afford to contemplate. Notwithstanding that, there can be no doubt that, contrary to what might be inferred from the Defendants' submissions, Mr McGlinn was just as entitled as any other employer to a proper and professional service from those that he engaged – at considerable cost - to design and build Maison d'Or. This action centres on his allegations that he did not get such a service from the four Defendants.
- It is at the heart of Mr McGlinn's case that Maison d'Or was so badly designed, and so badly built, that he was entitled to demolish it and start again. His claim is for damages for breach of contract/negligence against those that he says are responsible: the building contractors, Waltham Contractors Ltd ("Waltham"); the architects, Huw Thomas Associates ("HTA"); the structural, mechanical and electrical engineers, DJ Hartigan ("DJH"); and the quantity surveyors and so-called Project Managers, Wilson Large Associates ("WL"). Mr McGlinn's primary case on damages is put by reference to the actual cost of demolition and the estimated cost of rebuilding the whole house, in a total sum calculated (by the end of the trial) at £3,649,481.34. The alternative case is put by reference to the estimated costs of repairing the individual elements which are said to be defective, producing a final figure of £2,487,246.29. There are also disputes concerning an alleged overpayment of HTA's fees and outstanding fees said to be due to DJH.
- Although they would doubtless have taken centre-stage at the hearing, Waltham played no part whatsoever during the seven week trial, because they are in administration. Some of their former employees might have given evidence on behalf of HTA and DJH, but in the event they were not called upon to do so. For completeness, I should also note that Mr McGlinn has a separate claim concerning the over-valuation of the works which Waltham carried out. As a result of their absence from the proceedings, that over-valuation claim is pursued against WL and DJH only. That claim is due to be heard later this year, and thus forms no part of this Judgment.
- For the reasons which are set out below, I consider that, perhaps unusually in a defects case, the events before and during the construction of Maison d'Or are at least of some relevance to the allegations which are now made. Thus, following some general observations on the evidence at Section B below, I set out in Section C some of the key events in the chronology and at, Section D, I summarise the unsatisfactory nature (and almost non-existent records) of the contractual relationships between the parties. Then at Sections E and F, I consider the terms of the contract between Mr McGlinn and HTA, and analyse each of the breaches of contract/particulars of negligence alleged against HTA in the Scott Schedule. At Sections G and H I carry out the same, shorter, exercise in respect of DJH, and, at Sections I and J, there is a similar exercise in respect of the specific allegations against WL. At Section K, I consider the relevant principles concerning causation and the assessment of damages, identify the particular issues that arise in this case, and make a series of general findings on those issues. Thereafter, at Sections L, M and N I then apply those general findings in an assessment of the quantum of the damages recoverable, respectively, against HTA, DJH and WL. At Sections O and P I deal with the particular disputes that have arisen in respect of the fees payable to HTA and DJH. At Section Q, I set out a short summary of my conclusions.
- Before embarking on an examination of the detail, I should, at the outset, express my gratitude to counsel, solicitors and experts involved in the hearing of this trial. One of my distinguished predecessors in the Technology and Construction Court, His Honour Judge Newey QC[1], often remarked that he had only ever been obliged to complete one full trial on a Scott Schedule, and even that had been due to the incompetence of counsel. My experience in this Scott Schedule case has been entirely different. A large amount of material, and a host of detailed technical points, was dealt with in what I regard as an exemplary fashion. A tight timetable was produced, agreed, and then adhered to. I am extremely grateful to all those involved for their assistance.
B. GENERAL OBSERVATIONS ON THE EVIDENCE
B1 Factual Evidence
- The majority of the factual evidence was adduced on behalf of the Claimant. In addition to Mr McGlinn, I heard evidence from Mr Terence Disdale and Mr James Berryman of Terence Disdale Design ("TDD"), who played an important role in the design of the interiors and finishes of Maison d'Or; Mr Hardcastle and Mr Ellis of Centurion Management Services Ltd ("Centurion"), who managed Mr McGlinn's affairs on Jersey; Mr Mark Tanner, who was engaged by Mr McGlinn towards the end of the building works to try and improve what Mr McGlinn saw as serious deficiencies in the performance of Waltham; and Mr Martin Dobbs, Mr Anthony Holt and Mr Eric Sey, all of Charter Architects, who were appointed by Mr McGlinn to inspect Maison d'Or after the departure of Waltham from site and whose investigations form the basis of the Scott Schedule. In addition, I heard evidence from Mr Martin Holmes, the managing director of Camerons, the contractors who carried out a large part of the investigative and so-called enabling work, and Mr Richard Sugg of E.C. Harris, the Quantity Surveyor who produced costings of the repair and rebuild options being considered by Mr McGlinn in 2004-2005. There was also evidence from Fiona Diamond, of TDD, confined to a narrow issue concerning the cost of, and separate claim for, furniture storage.
- Although HTA had originally indicated that they relied on the statements of four different witnesses, they eventually chose to rely on just the two statements from Mr Carl Thornton, the architectural technologist who was chiefly responsible for the day-to-day running of the project on behalf of HTA. I found him to be an honest and straightforward witness, although I consider that he was not senior enough within HTA to have been given, as he was, almost complete responsibility for the day-to-day running of this project on their behalf. Two of the witnesses who were not eventually called by HTA, namely Mr Hiscock and Mr Prinn were, respectively, the managing director and the contract manager of Waltham. I have discounted their statements completely, save where particular points from those statements were put to Mr McGlinn during his cross-examination and accepted by him as being true and accurate.
- The other witness who was not in the event called by HTA to give evidence was Mr Huw Thomas himself. I have ignored the contents of both of his witness statements since they were not, in the result, relied on by HTA, and not the subject of an application by another party under CPR 32.5(5). On behalf of the Claimant, Mr Williamson QC submits that I should draw a number of adverse inferences from the fact that Mr Thomas was clearly available to give evidence, and had relevant evidence to give, but was not in the event called: see Wisniewski v Central Manchester Health Authority [1998] PIQR 324 and Jaffray v Society of Lloyds [2002] EWCA Civ 1101.
- In my judgment, some – but by no means all - of what Mr Thomas would have said was covered in the evidence of Mr Thornton. Other elements of his evidence were rendered unnecessary by Mr McGlinn's acceptance, during his cross-examination, of some of the factual matters put to him by Mr Bartlett QC. However, I accept Mr Williamson QC's submission that there were a number of important matters where the absence of any evidence from Mr Thomas must lead to findings or inferences which are contrary to HTA's case. Wherever these findings or inferences are the consequence of the failure to call Mr Thomas, I have endeavoured to identify that plainly in the relevant paragraph of this Judgment.
- I also accept Mr Williamson QC's submission that the court can have regard to the statements of Mr Thomas, not for the purposes of establishing the truth or otherwise of any particular matter or fact there addressed, but simply to satisfy itself as to what matters Mr Thomas would have given evidence about had he been called. This is not unimportant because, at the outset of HTA's case, Mr Williamson QC had indicated in writing those matters upon which he would cross-examine Mr Thomas and those matters which he would address via Mr Thornton. The decision not to call Mr Thomas was not announced until after Mr Thornton had completed his evidence. Thus the fact that Mr Thornton was not cross-examined on an issue, because Mr Williamson QC intended (and had announced that intention) to cross-examine Mr Thomas on that topic instead, may be of some relevance in my consideration of the HTA evidence. It is plainly relevant to any complaint by HTA that Mr Thornton was not cross-examined on particular issues.
- On behalf of DJH, the factual evidence was limited to Mr Ellerington. I have therefore discounted the statement of Mr Hartigan, who was not called to give evidence. Mr Whitting submitted that this decision was the result of the various agreements between the experts, and, in particular, the extensive agreement on the structural matters in respect of which Mr Hartigan would otherwise have given evidence. I accept that submission, and I have drawn no adverse inferences as a result of the absence of any oral evidence from Mr Hartigan. Indeed, as will be apparent from Section H below, I consider all the remaining issues on structural matters now turn either on argument or expert evidence. Factual evidence is irrelevant.
- On behalf of Wilson Large, Mr Reese QC chose to call no factual evidence. Mr Richards was, in truth, the only person at Wilson Large who was involved in this project and therefore the only person who could have given any relevant evidence. In general terms, I accept the proposition that, because the case against WL is pleaded on a contingent basis only (being dependent upon HTA's pleaded references to WL in their responses to the Scott Schedule and the failure of Mr McGlinn's case against HTA on those Items) HTA's decision not to call Mr Thomas explains, at least in large part, WL's consequential decision not to call Mr Richards. There were one or two points on which his evidence would have been of some assistance to me, but I decline to draw any adverse inferences against WL from the decision not to call Mr Richards.
B2 Mr McGlinn Himself
- Mr McGlinn was something of a controversial figure. He was certainly described in colourful terms by other witnesses, even by those who were called to give evidence on his behalf. Thus, Mr Dobbs of Charter agreed that he was a demanding client who was "forthright in his opinions … he was blunt and he said what he wanted". Mr Tanner said it was not unfair to say that people did not find Mr McGlinn the easiest person to get along with and that it was well known that he used "fruity language". Mr Tanner also said of the Claimant that "he knows what he likes" and that he believed he was a man who could take a strong dislike to people. Mr Sugg of E. C. Harris called him "an exacting man".
- In my judgment, these descriptions of Mr McGlinn were accurate. During his cross-examination, he was certainly forthright; he was relatively quick to anger; and he plainly took the view, before, during and after the work by Waltham, that since he was paying the bills, he could ask for what he wanted when he liked. However, whilst these character traits may explain why there were particular disagreements and difficulties on the Maison d'Or project, and why there were so many changes as the work progressed (which may, in turn, explain the genesis of at least some of the items now alleged to be defects) it does not seem to me that they excuse, or could be used to explain, defaults in design and workmanship.
- The other important point to make about Mr McGlinn's oral evidence was that it was based on what he freely confessed was a poor memory. It was clear to me that he had very little recollection of many of the most important events during the design and construction phases of the work. He kept no records himself; indeed, as he accepted during cross-examination, there was not a single document in any of the bundles which he had produced, written or signed. This created obvious difficulties for certain aspects of his case, particularly the oft-repeated theme that, at the outset of the project, he had asked for particular design features and standards which had subsequently not been provided. His poor memory made it very difficult for Mr McGlinn to counter the evidence of other witnesses who had much better recollections of particular meetings and other significant events between 1997 and 2001.
- However, it would be unfair to be too critical of Mr McGlinn's failure to keep records in this case. Precisely the same criticism can be made of HTA: there was a complete absence of minutes, notes or notebooks kept by HTA during the currency of this major project. Since they were the architects on this major project, the absence of any records of HTA's periodic inspections is a matter of particular concern. DJH also failed to keep the sort of detailed records that I would have expected to see.
B3 The Expert Evidence
- There were ten experts in total. In many ways, the most important were the two architectural experts: Mr Jowett, who gave evidence on behalf of Mr McGlinn, and Mr Salisbury who gave evidence on behalf of HTA. In respect of the mechanical and electrical matters, Mr McGlinn's expert Mr Moseby, and DJH's M&E expert, Mr Sworder, were able to reach such a large measure of agreement that it was unnecessary for them to give oral evidence at all. In respect of structural engineering matters, the relevant experts were Mr Ross-Gower for Mr McGlinn, and Mr Dibb-Fuller for DJH. As a result of their agreements, their oral evidence was very limited. In respect of quantum, Mr McGlinn's expert was Mr Fitch. HTA's quantum expert was Mr Linnett and DJH's quantum expert was Mr Pontin. WL had no need for any expert evidence save in respect of quantum, on which their expert witness was Mr Pope.
- This is not a case where I considered that any of the experts were doing anything other than endeavouring to do their best to assist the court. I rather regret that both the architectural experts (and at least one other expert) were subjected to some lines of questioning which appeared to be aimed at demonstrating the contrary: this was not perhaps an effective use of the parties' limited trial time. Save for the particular points I make about the expert evidence in Sections F, H and J below, I could not say that, in any discipline, I preferred the generality of the evidence of one expert over the evidence of another. Accordingly, I have considered and weighed up the expert evidence on an item-by-item basis.
B4 The Evidence Of The Defects
B4.1 The Problem
- One further unusual feature of this case, which created a certain amount of difficulty throughout the trial, was the nature, extent and quality of the evidence of the defects themselves. In relation to some items within the Scott Schedule, the evidence with which I have been presented as to the existence of defective work, or damage caused thereby, was sporadic and, in certain instances, controversial.
B4.2 The House Itself
- The first problem is that I am being asked to judge the nature and extent of defects which are said to have existed in a house which is no longer there. I did not see Maison d'Or at any time before it was demolished. When Mr McGlinn's decision to demolish was first made plain by the Claimant's solicitors, the solicitors acting for HTA wrote to them on 19 October 2004 to say:
"Whether it be Judge or arbitrator (or arbitrators), any tribunal that hears your client's claims will be at a significant disadvantage in making findings of fact about the quality and standard of the design and workmanship at the property, without the opportunity for a site visit. Your timetable appears to contemplate demolition prior to the issue of court proceedings (or reference to arbitration). This would mean that it would be impossible for there to be a worthwhile site visit …"
- This point looked to have been taken on board because, at a meeting on 2 December 2004, the Claimant's solicitor is noted to have confirmed the intention:
"… to file a claim with the courts by mid January and, assuming an early appointment of a Judge, to request the Judge's attendance to view the site before the end of January."
In fact, the claim form was not issued in January 2005. The house was demolished between February and April 2005, and the claim form was issued thereafter in May 2005. The case was assigned to me at the same time. Accordingly, by the time this case was in my list, it was impossible for me to view Maison d'Or. Contrary to at least one suggestion by HTA in cross-examination, I am quite sure that this was not the result of a deliberate policy on the part of the Claimant's advisors. However, it means that I am more than usually dependent on the quality of the secondary evidence of what was there.
B4.3 Inspections
- I do not suggest for a moment that, prior to the commencement of the court proceedings, the Defendants were not kept fully informed as to the state of play at the property.[2] On the contrary, I consider that the Claimant's solicitors were assiduous in their dealings with the solicitors acting for the defendants, and always informed them of opening up and other works at Maison d'Or prior to its demolition. Indeed, on at least one occasion, it was HTA who did not take up the offer of a joint inspection. Thus, my concern about the timing of the demolition of the property does not extend to a concern that the Defendants did not have a reasonable opportunity to make proper inspection. For the avoidance of doubt, I find that they were given proper opportunities to inspect.
- Accordingly, I reject the point at paragraph 32.2 of HTA's defence, to the effect that the demolition of Maison d'Or has prevented proper consideration of the defects by the parties and/or their experts. The problems, if there are any, have been for me alone, because I have had no similar opportunity to inspect. I am therefore entirely dependent upon what was produced as a result of those inspections, namely the reports, the photographs and the videos.
B4.4 Photographs
- The photographs were an important source of secondary evidence. Originally they were somewhat scattered throughout the expert's reports, the pleadings, and the oral (but not written) opening on behalf of Mr McGlinn. During the trial, an almost bewildering array of further collections of photographs was produced, in at least another six files. The absence of any exercise collating all these different photographs by reference to the individual Items in the Scott Schedule created a certain amount of difficulty, which the belated production of Bundle Q2 only partly alleviated. There have also been problems with the quality of some of the photographs relied on. For example, it could be said that the Claimant's own case about the replacement of 10,000 roof tiles (Item 4.1.1 in the Scott Schedule) turned on three photographs taken in March 2002, two of which are of poor quality. This is a point that I deal with in greater detail at Section F2.28 below.
B4.5 Videos/DVDs
- There are seven videos/dvds of this property, ranging in date from January 2002 to September 2006. I have found these videos/dvds to be of assistance in forming a general impression of the property, both at the time that Waltham left site, and thereafter. Unfortunately, not even this exercise was free from controversy because HTA's architectural expert, Mr Salisbury, produced a synopsis of some of the videos, only for Mr Jowett to complain that he did not accept that synopsis and to produce his own, often very different, summary of the same video. In the round, therefore, the contents of the videos/dvds have been of less help to me than ought to have been the case.
B4.6 The Lack of Evidence of Damage
- One of the features of the trial was the cross-examination concerning the evidence (or lack of it) of damage allegedly caused by the defects. I was struck by the relative paucity of evidence of physical damage. This is really a reflection of the point that I have made in Section C14 below, namely that this was not a case where the extensive investigations into the building problems were triggered by actual damage, such as cracks or leaks; here, the investigations resulted from a general level of dissatisfaction with Maison d'Or on the part of Mr McGlinn and which, when they were first carried out, led to the discovery of further defects. The consequence of this was that the evidence of damage (as opposed to defects) could fairly be described as thin; although, as I explain below, there was some limited evidence of water ingress and the like, in general terms, it seems clear that this was – if nothing else - a generally sound and secure structure.
B4.7 Summary
- In summary, therefore, it has not always been easy for me to appreciate the nature, scope and extent of the particular defects complained of in the Scott Schedule, or to see them in the context of the completed building. I was never able to see Maison d'Or itself; the videos/dvds are of some help, but there is a debate about what precise information I should take from any particular capture from the videos/dvds. The photographs have not been satisfactorily collated and are scattered throughout a large number of files. I am conscious, therefore, that I am deciding the Items in the Scott Schedule against a background of secondary evidence which is less helpful than should perhaps have been the case.
C. CHRONOLOGY
C1 The Site
- Mr McGlinn became a resident in Jersey in about 1996. At that time, he owned a property in St Aubin, a small town with a harbour on the coast of Jersey opposite St Helier. Unable to get planning permission for the works that he proposed at that house, Mr McGlinn looked round for another property in the same area. Because of his love of the sea, and the amount of time that he spent on his boats, Mr McGlinn was anxious to remain in St Aubin, where the properties on the hill above the harbour have wonderful views back across the moored boats and the bay.
- In late 1997, Mr McGlinn found and bought a property on the western slope above St Aubin known as Villa Gardena. He intended to demolish this small existing property on the site and to build a much larger house there. This was the site of what was to become Maison d'Or. The site was part way up the hill, and faced almost exactly due east. It looked out across, but was set well back from, the harbour and the sea. There were other houses below and around the site, as well as a large number of mature trees and shrubs. It was also surrounded, on the south, west and north sides, by the rising slope of the ridge beyond.
- It was the Claimant's case in the litigation that the site was severely exposed and in a hostile marine environment, and that due consideration should have been (but was not) taken of these matters in HTA's design of Maison d'Or and the specification of the relevant materials. HTA responded by reference to the criteria in the relevant British Standards, and argued that this site could not be described as "severely exposed" or even "exposed". The particular factors which they relied on in support of this argument included the specification of cavity walls and render to keep out the weather, the surrounding slope on three sides, and the trees and shrubs.
- This debate is dealt with in detail in Section F2.4 below. However, I should make clear at the outset that I have concluded that Maison d'Or was not an exposed site for design and specification purposes. I consider that this aspect of the case was exaggerated, first by Charter (who raised a number of criticisms based on their view of the exposure of the site but failed to do any exposure calculation at all) and later by Mr Jowett, who, when assessing the exposure rating of the site, appeared to ignore the design of the walls, the contours of the ground, and the proximity of the surrounding buildings, trees and shrubs. I find that this was not an exposed site in either the technical or the impressionistic sense of the word.
C2 The Professional Team
- The evidence was that HTA had a very good reputation on Jersey as competent and sympathetic architects, with a good relationship with the Planning Department. Mr Hardcastle, of Centurion recommended HTA to Mr McGlinn. In consequence, Mr McGlinn first contacted HTA whilst he was still in the process of buying the Maison d'Or site. He met Mr Thomas for the first time on 8 August 1997 and apparently made clear to him his desire to create a new dwelling on the site in what he described as a French Chateau style. Some RIBA documentation concerned with fees was apparently given to him, although Mr McGlinn could remember neither the meeting nor the fees booklet. It was suggested to Mr McGlinn in cross-examination that, at the meeting, Mr Thomas showed him a formal RIBA agreement, but that he said he was not interested in such things and threw it into the bin. Mr McGlinn rejected that suggestion emphatically. A few days later, on 12th August Mr Thomas sent him some pages (concerned with Work Stages and fees) taken from the RIBA Architect's Appointment document (known as the "Blue Book"). There was never any formal contract between Mr McGlinn and HTA and the precise terms of their engagement are now the subject of fierce debate. I deal with those issues in Section E below.
- One of the many disputes between HTA and Mr McGlinn as to the terms of HTA's retainer is the extent, if at all, to which HTA were responsible for the design of the interiors and finishes of the property. Whatever the scope of HTA's original obligations in this regard, there is no doubt that, some time in 1998, TDD were asked by Mr McGlinn to carry out a design function in respect of the interiors and finishes at Maison d'Or. Although it may have been Mr McGlinn's original intention that TDD would simply provide suggestions as to interior designs and finishings (because, as Mr McGlinn put it, "Mr Disdale knows my taste, my likes and dislikes") it is clear that, in reality, they played an increasingly important design role, issuing instructions on Mr McGlinn's behalf and making design/specification decisions in respect of what Mr Disdale agreed was 'every room in the new property'. There was no written contract of any sort between Mr McGlinn and Mr Disdale: the latter commented that this was a "very unusual" engagement and that his duties "were not defined at all".
- Rather less contentious was the engagement by Mr McGlinn of DJH to act as structural and mechanical and electrical engineers. They were engaged by Mr McGlinn in about May of 1998. There is no dispute that their engagement on each aspect of the project incorporated the relevant set of ACE Conditions of Engagement, 1995.
- Slightly earlier in 1998, Mr McGlinn had engaged WL to act as quantity surveyors. Again, there was no formal agreement of any sort recording the services that they were to provide. Later, as we shall see, the description of WL's role was altered when it was announced by Centurion that WL had also been appointed as Project Managers in January 1999. Again, however, the precise nature and scope of their new obligations (if any) were not set out in writing, and therefore remain the subject of major controversy.
C3 The Planning Application
- It appears that HTA began work on the design of Maison d'Or in the summer of 1997. Mr Thomas produced a series of watercolours about that time which showed the front elevation of the proposed house. The watercolours compare very closely with the photographs of the completed building taken four years later. Although there are some French influences, the house was, in truth, an attractive Arts and Crafts domestic building, not dissimilar to the late 19th century work of C.H.Voysey and the Scottish architect Robert Lorimer, whose work was and is sometimes referred to (not altogether kindly) as 'Scots Baronial'.
- HTA carried out a considerable amount of work in producing the necessary drawings to accompany the planning application. The proposed scheme involved replacing the existing small house with the much larger Maison d'Or. The application for planning permission was made on 30 April 1998. Planning permission was granted on 6 July 1998. Mr Jowett said that, in his view, "Mr Thomas did a good job" in obtaining planning permission for Maison d'Or.
C4 The Quality Standards To Be Achieved
- One of the features of this case is the absence of any written record of what Mr McGlinn wanted at the outset and, in particular, what standard of finish he required at Maison d'Or. As we shall see, when, in 2002 and thereafter, Mr McGlinn was expressing his dissatisfaction with Maison d'Or to his new advisers, a point he repeatedly made was that it had not been designed or built in accordance with the exceptionally high standards that he had asked for. This, inevitably, led to numerous disputes as to what precisely it was that he had required, given the absence of any written record or clear design brief.
- Mr Thomas did not give evidence. As to the contemporaneous documents which he produced that might be relevant to this question, there are the watercolours and design drawings that he produced and the 'Design Statement' dated April 1998, for which he was also responsible. That later document described the philosophy of the proposed new building as follows:
"Any new building on this prominent site provides an opportunity to improve the silhouette of St Aubins against the wooded background.
The proposed replacement house is deliberately broken up into a variety of rooflines which reflect the character of St Aubins. The style is also similar to the hotel, in an equally prominent position, to the south.
The new building is positioned further away from the nearest terraced buildings and is also approximately one metre lower than the existing house. A comparative sketch showing the different levels between existing and proposed is included in this report.
The proposed traditional built form is approximately 25% larger than the existing 1960's house. The remaining area is subterranean and includes the car parking.
On Market Hill, the existing rendered cottage and garage are to be demolished. The stone wall is to be extended over this opening, creating a continuous stone wall with a 'Jersey' archway in the middle. This forms the access to garages and house ...
Construction
The walls are rendered with stone quoins, arches, lintels and sills. The roof is to be natural slate and windows painted hardwood. The windows in the wall facing Market Hill are to be constructed with stone mullions …"
- Mr McGlinn, on the other hand, did give evidence and relied on a number of disparate conversations with Mr Thomas to demonstrate that he had made plain to him the exceptionally high standards he said he instructed. The most important was the visit to his boat. There was no dispute that, at some time in the late summer of 1997, Mr McGlinn invited Mr Thomas and his wife to his yacht, Tigre d'Or, which was then moored in the Mediterranean off the French coast. It was Mr McGlinn's case that the principal purpose of this visit was to explain to Mr Thomas that he required the same standard of finish on the yacht in the new house in Jersey: that Mr Thomas would, in his words, "see the quality of it". This became known in the contemporaneous papers and during the trial as "the boat standard", and, to all intents and purposes, it denoted Mr McGlinn's requirement for something like a perfect standard for all the joinery and other interior finishes.
- Mr McGlinn said, largely as a result of this visit to Tigre d'Or, that he believed that he had made it plain to Mr Thomas that he wanted the boat standard throughout Maison d'Or. That was his recollection at the much later meeting on 17th May 2002, when he said to his new advisers that he had originally wanted the boat standard but that the house had not been built to that standard.
- On a slightly different point, there was no dispute that, at the outset, Mr McGlinn had made it clear to Mr Thomas that he wanted natural materials, such as wood, stone and slate, to be used in the building of Maison d'Or. He said that he wanted an aged appearance, and for the finished house to look as if it had been there for a long time. This went as far as an express suggestion by Mr McGlinn that algae should be encouraged to grow on the stonework to give it an aged appearance, and that this could be achieved by putting yoghurt on the stonework.
- In connection generally with the quality standards and other requirements demanded by Mr McGlinn, I should mention two other documents. First, there are the Bills of Approximate Quantities, prepared by WL in October 1998. These Bills listed, at Appendix 1A, HTA and DJH's drawings on which both the tender and the contract were to be based. Bills 1-4 were apparently prepared by WL and there is no evidence that HTA or DJH had any direct input into their contents. The Bills contained a number of provisions dealing with the standard or quality of the work to be performed by the contractor. They included:
a) A reference in Bill 1, Clause A20/110, to the JCT Standard Form of Building Contract 1998 edition, which, at clause 2.1 provides:
"The Contractor shall upon and subject to the Conditions carry out and complete the Works in compliance with the Contract Documents, using materials and workmanship of the quality and standards therein specified, provided that where and to the extent that approval of the quality of the materials or the standards of workmanship is a matter for the opinion of the Architect such quality and standard shall be to the reasonable satisfaction of the Architect."
b) Bill 1, Clause A33/110 which provided:
"GOOD PRACTICE: Where and to the extent that the materials products and workmanship are not fully detailed or specified they are to be –
-Of a standard appropriate to the Works and suitable for the purposes stated in or reasonably to be inferred from the project documents, and
– In accordance with good building practice."
c) A little further on in the same Bill, under the heading of 'GENERAL QUALITY OF WORKMANSHIP' there was a reference to British Standard 8000. That reference provided as follows:
"BS8000: BASIC WORKMANSHIP:
– Where compliance with BS800 is specified, this is only to the extent that the recommendations therein define the quality of the finished works.
– Where BS8000 gives recommendations on particular working methods or other matters which are properly within the province and responsibility of the Contractor compliance therewith will be deemed to be a matter of general industry good practice and not a specific requirement of the CA under the Contract.
– If there is any conflict or discrepancy between the recommendations of BS8000 on the one hand and the project documents on the other, the latter will prevail."
- Secondly, there are the Building Regulations Notes dated March 23 1999. These were prepared by HTA. They ran to nine pages and contained a series of detailed provisions. For example, at paragraph 2.1.1, the finish to the external walls was specified as:
"External masonry paints: Keim Mineral Paints Ltd ... all in strict accordance with the manufacturer's recommendations."
A little later in the same document, at paragraph 2.1.2, the render was specified as: "18 mm 2 coat sand lime cement render". This document is perhaps as close as HTA ever got to producing a detailed specification for the proposed works. There was no evidence as to who received copies of these Notes, or when.
C5 The Sandbanks Property
- At about the same time that HTA were working on the planning application in respect of Maison d'Or, Mr McGlinn asked them to carry out a similar exercise in respect of his property at Sandbanks, in Poole, Dorset. For a while, the two projects ran in parallel. On the Sandbanks property, HTA obtained planning permission for a rather different kind of building, with more steel and glass. It was described during the trial as a contemporary, Frank Lloyd Wright house. However, on the Sandbanks property, HTA's retainer was not extended beyond the obtaining of planning permission. The detailing and construction phases were taken over by The Charter Partnership of Bournemouth. They were, much later, to become closely involved with Maison d'Or.
- The simultaneous progression of the Sandbanks project is relevant to this case because it was the subject matter of a major falling-out between Mr McGlinn and Mr Thomas (see Section C8 below). It is also relevant because, when Charter were engaged to oversee the detailing and construction of the Sandbanks property, it appears that, from the outset, they were told in clear terms by Mr McGlinn that he required the boat standard of finish. Mr McGlinn said that he made that clear; that was accepted by Mr Dobbs of Charter. It appears that, in consequence of this instruction, the Charter Partnership advised Mr McGlinn that such a standard would come at a significant financial premium, and that specialist contractors, from outside the UK construction industry and used to working on boat-fitting contracts, would be required to achieve such a standard.
- In his cross-examination, Mr Dobbs of Charter explained the differences between the fitting out of a boat and fitting out works on a construction site. He said:
" …I think the conditions within which the joinery is applied and the sub-structure to which the joinery is applied is very important, and it is in a different environment when it is being constructed in a ship yard to on a building site.
Q: So the environment of the construction site is one of the factors that makes the difference?
A: It does have an impact on it, yes.
Q: Both because of the substrate and because of just the very fact it is a construction site, it is damp, and there are people going around, and machinery and other trades working, and all that sort of thing.
A: It does have additional problems.
Q: Because of the things I have been mentioning?
A: Yes."
C6 The Tender Process
- On 14 October 1998, WL sent out a set of tender enquiry documents to seven contractors, including Waltham. The documents that were sent out included the Bills of Approximate Quantities, the Architect's tender drawings and the Structural Engineer's tender drawings. The Bills were not in more detailed form because of time constraints; Mr McGlinn accepted in cross-examination that his instructions to WL were to proceed quickly, and that he therefore accepted the preparation of the Bills in this form.
- As I have indicated, the Approximate Bills were prepared by WL, and there was nothing to suggest that any of the other professionals had any input into their preparation. Similarly, the architect's drawings were prepared by HTA and the structural engineer's drawings were prepared by DJH. Again there was nothing to suggest that any other professional was involved in the production of these documents.
- At the time that the tender enquiry documents were sent out, the budget figure for the works was £1.5 million. Mr McGlinn said this figure had come from HTA or WL. However, at the time that the tenders were sought, WL had advised Mr McGlinn in writing that the estimated cost of the project was likely to be in the region of £1.9 million. That is the figure set out in the WL cost analysis of 23 October 1998 which was sent to Mr McGlinn.
- WL were right to be cautious. When the tenders were received on 13 November, only three contractors had provided a figure. Amey Building Ltd of Penarth had estimated £2,788,045, and JF Marrett & Son of Jersey had estimated £2,497,250. The lowest tender figure was provided by Waltham in the sum of £2,214,841. Their tender was sent under cover of a letter dated 13 November 1998 which emphasised "the congested nature of the site" and made clear that, amongst other alterations to the proposed works, Waltham had priced for "16" x 10" Spanish slates (French slates have not been used on the island for several years)". The Waltham tender indicated a contract period of 64 weeks, from 7 December 1998 onwards.
- According to Mr McGlinn, Mr Richards of WL spoke to him, on the telephone, and said that, if the budget figure of £1.5 million was to be retained, signification reductions were going to be necessary in the scope of the works. Mr McGlinn said: "I asked him to look at costs and to see if he could get them down". It is clear from the evidence that everyone understood that reducing the Waltham tender sum to the budget figure of £1.5 million would be a very large reduction.
- HTA, DJH and WL met on 19 November to discuss ways in which cost savings could be made to reduce the tender sum back towards the budget figure. Brief minutes were taken of the meeting by DJH. A number of possibilities were explored. In his letter to Mr McGlinn of 20 November 1998, Mr Richards said that none of these proposed changes "alter the original design of the house" although, later in the same letter, he said that there would indeed be "some design changes" as a result of this exercise. The proposed reductions (ten in all) were then set out in a tender report which Mr Richards sent to Mr McGlinn the following day (21 November). This identified over £548,000 odd worth of savings, getting the total cost figure down to £1.66 million. This included the omission of the kitchen and utility fittings, significant savings in the mechanical and electrical services and other important reductions in both the exterior and interior elements of the proposed building which are directly relevant to some of the most important allegations in the Scott Schedule.
C7 Particular Reductions In Workscope
- The reductions to the scope of the works that were made during late 1998/ early 1999 are relevant in two ways. First, the Defendants say that the mere fact that they were instructed to, and did, make significant reductions to the scope of the work in order to get Waltham's figure down to the budget figure of £1.5 million was entirely inconsistent with Mr McGlinn's case now that he had insisted from the outset on the highest possible specification and standards of finish. I deal with this point at Section E3.3 below.
- Secondly, some of the reductions are directly relevant to the specific allegations now made by Mr McGlinn because, within the Scott Schedule, there are a number of items where the suggestion is that the Defendants were negligent and/or in breach of contract in allowing particular reductions to be made from the original scope of work. Although it is unnecessary, at this stage, to consider the specific allegations concerning the reductions that were made, it is instructive to focus on two which loomed large during the trial. Those are the changes from granite facings to Haddonstone facings, and, internally, the change from oak to idigbo.
C7.1 Granite To Haddonstone
- As noted in Section C4 above, the original design concept (as set out in the Design Statement) envisaged rendered walls with stone copings, lintels and quoins. However, at some point prior to the preparation of the Bills, the external stonework (which was largely decorative) was apparently replaced with blue granite. Following the receipt of the tenders, one of the proposed reductions was the replacement of that granite with reconstituted stone, which was, therefore, a move back to the original concept. It was referred to in the minutes of the meeting on 19 November as the removal of "all areas of natural stone and replace with stucco and recon stone". In the report of 21 November 1998, faxed by Mr Richards to Mr McGlinn, this proposed reduction read as follows:
"External walls (£52,000) – omit granite – add render quoins, stone sills and plinth (approximate quantities);"
This was clumsily worded. Of course, the proposed change from granite back to stone did not affect the render, which remained the same; what was proposed was replacing the granite facings and sills to facings and sills made of reconstituted stone.
- On 4 December 1998, the professional team, this time with Waltham, met to discuss the reductions. This meeting was minuted. Minute 1.3 reads:
"Elevations – Haddonstone or similar reconstituted stone will be incorporated for plinths, copings, balustrades and sills."
Haddonstone are well-known manufacturers of reconstituted stone products of various kinds. There was evidence before me, which I accept, that Haddonstone is regularly used for prestige building projects, including the refurbishment of Grade I listed buildings. The minutes of this meeting were sent to Mr McGlinn and to Mr Hardcastle of Centurion. Mr McGlinn accepted that the minutes were sent to him and also accepted that he made no complaint (either then or subsequently) about this proposed change from granite to reconstituted stone.
- There was originally some dispute as to whether, at some stage in late 1998 or early 1999, Mr McGlinn saw a Haddonstone catalogue. However, although Mr McGlinn could not recall it specifically, he said that he thought he must have looked at such a document. On balance, I think it more likely than not that Mr McGlinn did see the Haddonstone catalogue which provided more details about their reconstituted stone product. Further, given that it was Mr Thornton's recollection that there was a meeting later in December attended by Mr McGlinn, Mr Thomas, Mr Thornton and Mr Disdale, at which the Haddonstone was generally approved, that seems the most likely occasion on which Mr McGlinn looked at the catalogue. It was suggested to Mr Thornton in cross-examination by Mr Reese QC that, by reference to other documents, this meeting was likely to have been on 14 December. Although there were no notes or minutes of this meeting, it seems to me that, again on the balance of probabilities, there was a further meeting on this date attended by Mr McGlinn at which, amongst other things, the Haddonstone that had been proposed and agreed by the professional team was accepted by Mr McGlinn.
- On 15 April 1999, Mr Richards of WL sent Mr Disdale of TDD a fax dealing with certain matters to be discussed at a design team meeting the following day, which Mr Disdale was due to attend. One of the items noted in the fax was:
"Ian wants you to confirm acceptance of the colour of stonework."
At the meeting, which was attended by HTA, DJH, WL, TDD and Waltham, the following was noted under "external finishes":
"(2) Haddonstone – Portland 01 sample approved for all reconstructed stonework.
(3) Additional stonework to be added around attic roof in place of timber.
(4) Haddonstone traditional vertical balustrading to be used to balconies where shown."
- Mr Disdale said that his role "was to aesthetically advise him [Mr McGlinn] on what suitable materials to use on the building". He confirmed that, at this meeting, he approved the colour/appearance of the particular type of Haddonstone that had been proposed. In answer to questions from Mr Reese QC, Mr Thornton said that these minutes showed Mr Disdale's requirements in respect of matters which he (Mr Thornton) was aware Mr McGlinn was going to look to Mr Disdale to specify. As he put it: "the instructions came from Terence Disdale".
- In consequence of these events, I find that the professional team and Waltham worked on the basis that a particular type of Haddonstone had been approved by Mr McGlinn and Mr Disdale for use (instead of granite) for the quoins, copings, cills and decorative beading in the external walls of Maison d'Or. That is how it was subsequently constructed. In cross-examination, Mr McGlinn thought it possible that, once the Haddonstone had been erected, his only comment was that it looked too neat and new. That would have been consistent with his desire for an aged appearance: see paragraph 43 above. That was Mr Thornton's clear recollection. Mr McGlinn accepted that, at no time prior to the departure of Waltham did he raise any complaint about, or criticism of, the Haddonstone.
C7.2 Oak To Idigbo
- The minutes of the meeting on 19 November 1998 do not refer to this proposal. However, the tender report of 21 November, sent by Mr Richards of WL to Mr McGlinn, contained this proposal:
"5 Windows/doors (£10,000) – change Oak to Idigbo (estimate) …
7 Internal doors (£20,000) – change panel doors to flush, Oak to Idigbo (estimate)."
It is not clear who first suggested this change: on the basis of the documents, it seems more likely than not that it was Mr Richards. However, it appears that the professional team and Waltham operated on the basis that, in the absence of any objection from Mr McGlinn or Mr Disdale, this proposal would also be activated.
- It does not appear that the change to idigbo was discussed at the meeting on 4 December (paragraph 58 above). It appears that, at some stage in late 1998 or early 1999, and very possibly at the meeting on 14 December (paragraph 59 above), Waltham brought a sample of idigbo to HTA's offices and Mr McGlinn saw it and approved it. In cross-examination Mr McGlinn accepted that he had seen the sample of idigbo and that, in the absence of any suggestion from anyone that there would be a problem with the use of idigbo, he approved it. He said that someone (he thought Mr Richards) said that idigbo was as good as oak.
- At the meeting on 16 April 1999 (paragraphs 60 - 61 above), it seems that the idigbo was approved by all those present. Mr Disdale confirmed in his cross-examination that he had approved the idigbo on that occasion. Minute 11.1 of the meeting read as follows:
"Windows/doors to be idigbo.
Sampled window to be provided with spare timber to try alternative finishes in paint for shutters and/or windows and doors."
This item was to be actioned by HTA, Waltham and Mr Disdale. Mr McGlinn accepted in cross-examination that it was his understanding that Mr Disdale had specifically approved the appearance of the idigbo sample at this meeting. Again, Mr McGlinn accepted that at no time prior to the departure of Waltham had he made any criticism of the idigbo at Maison d'Or.
C8 The Altered Role Of Wilson Large
- Unfortunately, in December 1998, there was a major disagreement between Mr Thomas and Mr McGlinn concerning fees of about £8,000 claimed by Mr Thomas in respect of design work on the Sandbanks property. Mr McGlinn and Mr Thomas had an argument about these outstanding fees in a pub in St Aubin. This dispute had very serious consequences because Mr McGlinn decided that, not only would he not pay HTA's fees, but he would also not pay any of the consultants' outstanding fees in respect of both the Sandbanks property and Maison d'Or. He also expressed the intention to sack HTA from both projects. Eventually, however, he was persuaded out of this extreme stance by Mr Richards at WL and Mr Hardcastle at Centurion.
- As a result of Mr Richards' intervention, and a meeting that he had with Mr McGlinn in January 1999 at St Katherine's Dock, it seems that Mr McGlinn decided not to sack HTA after all. He subsequently made payment of the outstanding fees to all the consultants on both projects. However, he did not modify his hostile views of HTA. From this point on, he did not communicate with Mr Thomas at all for almost two years: as he put it, "I could not speak to the architect". When trying to understand how and why this project went so wrong, it is perhaps unnecessary to look further for at least one explanation of the subsequent events than the fact that the client and his architect did not speak for almost the entire period that the house was being detailed and constructed.
- It also appears that Mr McGlinn did not like being told what to do by Mr Hardcastle. The latter said in evidence that Mr McGlinn took umbrage at the advice he had given and that the two men never spoke again.
- The disagreement over fees between Mr Thomas and Mr McGlinn had another important consequence. Mr McGlinn was anxious to find somebody else who would effectively act as a go-between in the relationship between the client and the architect, and to deal with all the financial arrangements in respect of both projects. He asked Mr Richards to take on that role. According to Mr Hardcastle of Centurion, Mr McGlinn told him that Mr Richards would become the Project Manager, although Mr McGlinn denies saying that. Accordingly, on 29 January 1999, Centurion wrote to HTA, DJH and others, to say:
"Please be advised that Mike Richards of Wilson Large, chartered quantity surveyors, Wolvesey Palace, College Street, Winchester, SO23 9NB … has been appointed Project Manager for the development of Villa Gardena. Accordingly, may I ask you please to submit all future invoices directly to Mr Richards."
- Mr Hardcastle was clear that Mr McGlinn had told him that Mr Richards was going to be the Project Manager. However, Mr Hardcastle did not write to WL in those same terms and, like so much else in this case, WL dispute that they were appointed to act as Project Manager, at least in the usual sense of that expression. That is a dispute I deal with at Section I below. But, whatever the precise terms of WL's engagement as Project Manager, the fact remains that WL were solely responsible for administering all of the many financial arrangements arising out of the design and construction of Maison d'Or, including the identification of the amount to be paid to Waltham on an interim basis.
- The appointment of Mr Richards could have had an adverse effect on HTA, although, in the absence of any evidence from either Mr Thomas or Mr Richards, it is inappropriate for me to make any detailed findings on the point (see also paragraphs 254 and 764 below). Mr Thornton was too junior within HTA to be involved with contractual matters and Mr Thomas never put any concerns in writing.
- There was no signed contract between Mr McGlinn and WL to reflect this new role. Indeed, there were not even any written proposals from either side as to what this role might involve. Some time later, Mr Richards explained to Mr McGlinn's then solicitor that this was because Mr McGlinn "did not want to be bothered by a formal agreement".
C9 The Building Contract
- It seems that, on about 23 or 24 November, Mr McGlinn spoke to Mr Richards and consented to the work going ahead on the basis of the proposed reductions from Walthams' tender identified above. Mr McGlinn said that he was happy with the reduction of £548,000 (from the tender sum of £2.2 million odd) and was uninterested in how this had been achieved. On 24 November, Mr Richards wrote to DJH saying, amongst other things: "Ian McGlinn has given the go-ahead". Mr McGlinn accepted in cross-examination that, although he could not recall the conversation, he must have given this instruction to Mr Richards.
- Following Mr McGlinn's decision to go ahead with Waltham, on 25 November, WL wrote to Waltham in terms which were referred to at the trial as a 'letter of intent'. The full text of the letter read as follows:
"Villa Gardena St Aubin Jersey
Further to the receipt of your tender on 13 November 1998 on behalf of the client in respect of the above mentioned project, we are pleased to inform you that it is the intention to appoint you as Main Contractor to carry out the specified work, subject to a satisfactory conclusion to negotiation of a schedule of modifications to achieve the project budget and your signature of the contract documents, which shall be forwarded to you under separate cover. Meanwhile will you proceed with whatever action may be necessary to commence your construction programme inter alia the following:-
1. Agreement of a detailed programme with the Design Team.
2. Allocation of plant, labour and materials.
3. Advance ordering and stockpiling of materials where necessitated by extended delivery periods.
4. Liaising with the relative sub-contactors and agree their detail programmes.
5. Liaising with all public and Statutory bodies including serving of necessary building notices to the Building Inspector.
6. Taking out of insurances as required under the terms of the contract. To submit as soon as possible, copies of your insurance policies/endorsements as called for under the relative contract clauses. To satisfy yourself that all sub-contactors have suitably entered into the requisite form of agreement and that they have indemnified you against all conditions in accordance with the contract.
7. Progressing the performance bond as identified in the bills of quantities.
A contract sum will be negotiated with the quantity surveyor, before commencement of any works on site, on the basis of your tender, detailed post tender reductions, submissions and discussions.
In the event of your nomination for this work not proceeding for any reason outside your control or influence, it is agreed that any abandonment cost to be paid will be negotiated with the quantity surveyor against a quantum meruit assessment of the work actually undertaken up to the date of such termination and any works will be made available to the client. Failure to reach a satisfactory agreement of a contract sum will not be deemed for this purpose as outside of your control and consequently abandonment costs will not be considered in this respect."
- Accordingly, as at the end of November 1998, there was no agreement between Mr McGlinn and Waltham (the two parties to any proposed building contract) in respect of the scope of the works (because of the proposed changes/reductions in workscope); the price of the work (because the letter says that the contract sum is to be negotiated); and the period which the contract works would take (because the letter says that a detailed programme had to be agreed). In those circumstances, it might be thought that a letter of intent in these terms was a little premature.[3]
- Despite the terms of the letter, no formal building contract was ever entered into by Mr McGlinn and Waltham, and, even more surprisingly, the letter was never updated. In August of 1999, after Waltham had been working on the site for many months, WL sent them a set of contract documentation which, in the round, duplicated in their entirety the documents sent out with the original tender enquiry. However, this contract was never signed by Waltham and sent back. Whether this was simply due to inadvertence is unlikely; there is a clear suggestion in the papers that Waltham deliberately decided that they could not sign up to this contract because they were unable to agree to a completion date for the works due to the number of variations. It is likely that this was a classic case where a contractor was allowed to start work before a contract was or could be agreed, and by the time the parties might have been in a position to formalise a binding contract, it had been overtaken by events. Mr Thornton said that it was his understanding that "the contract was not signed because it was in flux". However, notwithstanding the absence of a contract, Waltham often wrote to HTA making claims pursuant to specific clauses of the JCT standard form, and purporting to rely on specific provisions that they considered helpful.
- What, then, can be said about the precise legal relationship between Mr McGlinn and Waltham? It seems to me that it would be idle to suggest that there was no contract, given the fact that Waltham carried out £4 million worth of work at Maison d'Or and the clear warning against finding no contract at all in such circumstances from Steyn LJ (as he then was) in G Percy Trentham v Archital Luxfer [1993] 1 Lloyds Rep 25 at 27. There he made the point (with which I respectfully agree) that:
"The fact that the transaction was performed on both sides will often make it unrealistic to argue that there was no intention to enter into legal relations. It will often be difficult to submit that the contract is void for vagueness or uncertainty. Specifically, the fact that the transaction is executed makes it easier to imply a term resolving any uncertainty, or, alternatively, it may make it possible to treat a matter not finalised as inessential."
- It should also be noted that, although Waltham played no part in the hearing, their pleaded defence maintains the stance they adopted during the works: it assumes the existence of a binding contract, and indeed purports to rely on a number of the terms of the JCT Standard Form where they are considered to be helpful to the contractor, without ever addressing matters such as the agreed work scope or the contract completion date.
- For present purposes it seems to me that Waltham and Mr McGlinn, through his agents, were agreed that, to the extent that it was consistent with the specific agreements that had been reached, the JCT Standard Form of Building Contract, 1998 Edition, would be incorporated into their contract. In addition, it seems to me that there was an agreement between Mr McGlinn and Waltham that the preliminaries and general conditions set out in Bill 1 of the Bills of Approximate Quantities would also be incorporated into their contract. That was certainly the important assumption on which WL operated. However, the fact that these JCT conditions look to have been broadly agreed as between Mr McGlinn and Waltham should not be taken to mean that the obligations of any of the professionals on this project must have been those which are envisaged to exist by the JCT Standard Form.
C10 The £10,000 Loan
- One of the many unusual features of this case was that Waltham loaned HTA the sum of £10,000 at the outset of the works in April 1999. The existence of the loan was not revealed by HTA to Mr McGlinn himself, even though it was not paid back until two years after Waltham had left site. Although there was a letter of 7 April 1999 which indicated that Waltham had informed WL about the loan (because it was an item in an early Waltham valuation which was approved by WL and later certified by HTA) this letter:
a) Was not on WL's files;
b) Was disclosed by Waltham but was not introduced into the court bundles until after the conclusion of all the oral evidence;
c) Was not referred to by Mr Thornton in his statements or oral evidence.
- Mr Thornton was asked about the loan itself. From his evidence, it appeared that:
a) He became aware of it either shortly after April 1999 or, at the latest, "some months afterwards";
b) He was not aware that it was, as he put it, "paid through the contract" (i.e. included by Waltham in a valuation of their preliminaries, accepted by WL, certified by HTA, and paid by WL on behalf of Mr McGlinn);
c) The fact that it was paid through the contract came as "a shock" to him;
d) As far as he was aware, the fact of the loan was not disclosed to Mr McGlinn or his representatives.
- I share Mr Thornton's shock at this event. It seems to me that it was quite wrong for HTA – and this must, in reality, mean Mr Thomas - to seek or accept a loan from the contractors whose work they would be inspecting on behalf of Mr McGlinn. It was a grave lapse of professional judgment, leaving HTA vulnerable to an obvious and justified attack on their lack of integrity and independence. This lack of judgment was compounded by their failure to inform WL or Mr McGlinn; even if Mr Richards realised from Waltham's letter of 7 April 1999 that this loan had been made (and I make no findings either way), that cannot excuse HTA, because there was nothing to show that they knew that the letter had even been sent. The letter did not, could not, excuse Mr Thomas from telling WL and Mr McGlinn about the loan, and he failed to do so.
- I do not, however, accept the proposition that, merely because of the loan, HTA must have been in some way "softer" on Waltham than they would otherwise have been, particularly in respect of the making good of defects. I find that Mr Thornton made his inspections and dealt with Waltham without any regard to, or even subconsciously influenced by, the existence of the loan. I accept his evidence that, in carrying out his inspections, Mr Thornton "had little regard to the firm's position in relation to any money they owed anybody". Whether he made those inspections properly is, of course, another issue altogether.
- I find, too, that the failure on the part of HTA to call Mr Thomas supports my view that the making of the loan, and the failure to explain it to Mr McGlinn, was a grave lapse of professional judgment on the part of Mr Thomas. However, save where there are particular Items in the Scott Schedule on which Mr Thomas purported to give evidence as to periodic inspections, I do not consider that the failure to call Mr Thomas should affect my perception of Mr Thornton's performance as the inspecting architect.
C11 The Progress Of The Works
- I accept Mr Williamson QC's submission, made on behalf of Mr McGlinn, that the events between February 1999 (when the work started) and December 2001 (when Waltham stopped work) are of some significance to the specific allegations of default in this case. It is also important to set out, by way of background, the general features of the progress of the work over this period. There were three primary sources for that information: the contemporaneous documents in the sixteen G bundles, which were referred to only sparingly in the cross-examination; particular parts of the oral evidence of Mr McGlinn and Mr Thornton of HTA; and the lengthy paragraph 4 of the statement of Mr Thornton, which was not the subject of substantial challenge.
- The work started in February 1999. Between February and October 1999, there were site meetings, on average, every fortnight, which were minuted by Waltham, not HTA. They were generally attended by Mr Thomas and Mr Thornton of HTA, as well as Mr Richards of WL, and representatives of DJH and Waltham. From November 1999, the frequency of the site meetings dropped to once a month. With one or two exceptions, HTA's sole representative at these monthly meetings was Mr Thornton. The minutes of these meetings demonstrate that, by January 2000, the ground floor slab had been cast and the blockwork walls were progressing. By October the same year, the main structure of Maison D'Or had been completed, namely the walls, windows, roof and so forth. Thereafter, as Mr Thornton accepted, the main focus of the monthly site meetings was in respect of the internal works, principally the mechanical and electrical works. Mr Thornton also said that his periodic inspections were carried out on the same day as the monthly meetings, usually in the company of Mr Richards of WL.
- By reference (principally) to the evidence of Mr Thornton in cross-examination, I find that there were a number of typical features of a large-scale building contract that were present here. These included:
a) Letters from the contractor, Waltham, to HTA, as architects, raising queries and requests for information and instruction, and responses by HTA;
b) Letters from Waltham to HTA requesting specific instructions and responses by HTA;
c) Letters from Waltham to HTA confirming oral instructions given by Mr Thornton;
d) The production of detailed design drawings by HTA, which were revised in the usual way during the project;
e) The co-ordination by HTA of the design work done by DJH;
f) The issue by HTA of interim certificates for payment;
g) The periodic inspection by HTA of the works as they progressed on site.
- Again, largely by reference to Mr Thornton's evidence in cross-examination, I find that the following, rather more unusual, features also existed on this project:
a) The absence of any formal written instructions issued by HTA to Waltham, either in the standard RIBA/JCT form or, indeed, any other written form;
b) The absence of any written or otherwise minuted criticism or complaint by HTA to Waltham in respect of any single aspect of the construction work;
c) The making of the loan of £10,000 from the contractor to the architect at the outset of the works, which was not disclosed directly and openly to Mr McGlinn: see Section C10 above.
- Mr McGlinn accepted in cross-examination that, during this period, he would visit Maison d'Or from time to time and, if he saw something which he did not like, he would instruct it to be demolished and rebuilt in another way. Mr Disdale confirmed that Mr McGlinn often changed his mind "when he saw things constructed". Therefore, even though Waltham might have built the particular feature entirely in accordance with the drawings with which they had been provided, Mr McGlinn would consider the feature in question and then decide that he wanted something different. Mr McGlinn said that, since he was prepared to pay for the change, this was an attitude that he was entitled to adopt: "I was prepared to pay for it and they had time". This approach was consistent with his statement, early on in his cross-examination, that his wealth allowed him to indulge his likes and dislikes.
- Of course, as Mr Jowett acknowledged in paragraph 4.6 of his expert's report, these events provide an explanation for at least some of the delay and disruption experienced during the construction of Maison d'Or. They also provide the background to some of the allegations in the Scott Schedule.
- Two examples of this practice, both of which Mr McGlinn accepted, concerned the two main bedrooms. In Bedroom 2, which had originally been built, as per the drawings, with an open balcony and a turret room, Mr McGlinn then instructed that the turret should be closed off with windows. The posts which carried the roof of the turret then had to be turned into window mullions and extensive further work was required. Mr McGlinn did not accept the suggestion that Mr Thornton had told him that adapting the existing timbers and windows would not be as good as having the whole thing purpose-made in the joinery shop. In Bedroom 1, Mr McGlinn instructed the raising of the floor in the study and the lowering of the window sill in the study and bedroom, to improve his view, as well as the extension of the balcony to Bedroom 1 to make it larger.
- On this same general point, at paragraph 4 of his statement, Mr Thornton identified other extensive changes to the works, some of which form the background to other items in the Scott Schedule. Mr McGlinn was invited to read this lengthy paragraph and concluded that "it seems right". The many changes identified by Mr Thornton included:
a) Significant design changes in April 1999;
b) The addition of the swimming pool in August 1999 and, in April 2000, a new requirement that the cover of the swimming pool could be walked over. This is directly linked to Item 10.1.1 in the Scott Schedule;
c) Changes introduced in August 1999 to the sitting room, kitchen, attic/gym, billiard room and family room;
d) The "numerous changes" in March and April 2000 in respect of the billiard room, the front door, the staircase in the entrance hall, and the cellar/utility room;
e) 21 items of changes identified as a result of Mr McGlinn's visit to the property on 31 October 2000;
f) Further changes in relation to the electrical work in January 2001;
g) Further changes in April 2001 including changes to the floor tiles;
h) Changes to the entrance hall and stairs, changes to the sitting room, and changes to the kitchen made in June/July 2001;
i) Changes in November and December 2001 to the swimming pool cover (Item 10.1.1) and to bedroom 4 and the garage.
- Three points emerge from Mr Thornton's lengthy description of the changes to the works (and their effect) during the three year period in which Maison d'Or was constructed. The first, which was echoed by others, was the delay on the part of TDD in producing internal design features, a failing which Mr Disdale candidly accepted during his cross-examination. It may be that, at the outset, the relationship between Mr McGlinn and TDD was entirely informal, and that, therefore, the production of information for Mr McGlinn was not one of TDD's highest priorities, but by 2000, and the construction of the house itself, that could no longer be an excuse for the late delivery of promised information.
- Secondly, there is the likelihood that, because Mr McGlinn issued peremptory instructions on his irregular visits to the site which resulted in the destruction of work which the professionals and Waltham regarded as perfectly satisfactory, this would have had an effect on the morale and, up to a point, on the performance of the contractors and consultants working on Maison d'Or. However, I reiterate that, in general terms, I do not consider that, without more, these instructions and events could be used to excuse specific errors of design or workmanship.
- Thirdly, although the scope and scale of the changes made by Mr McGlinn demonstrated that, if he did not like something about Maison d'Or as it was being built, he pointed it out and had it changed, he never complained about the Haddonstone (Item 1.2.1 of the Scott Schedule), the idigbo (Item 2.2.3), or the masonry paint on the render (Item 1.1.2). In respect of the Haddonstone, he accepted that it was possible that the only comment that he made was that the stone looked too neat and he again requested that yogurt be painted on it to promote the growth of algae and mould (paragraph 62 above). As to the idigbo, he made no comment at all. And as to the render and paint, although he said that he knew that the walls had been painted and he had made no criticism of that, he sought to excuse that omission by arguing that "at that time it was too far gone". It therefore follows that, although Mr McGlinn was not shy about making radical changes to the completed works, he did not seek to make changes in respect of these three aesthetic elements of Maison d'Or which feature prominently in the Scott Schedule and which, on the face of it, were apparent to him from 2000 onwards. That is a point to which I return below.
C12 The Appointment Of Mr Tanner
- By the summer of 2001, it was plain that the Maison d'Or project was in a certain amount of difficulty. The exterior of the house was largely complete and, whilst the interior was certainly moving towards practical completion, it was some way from achieving that status. Mr McGlinn had understood originally that the contract price was going to be £1.66 million but, by this stage, he had paid Waltham approaching £4 million for the work. Everything had taken considerably longer than the year which Waltham had originally estimated. Mr McGlinn was, not unreasonably, dissatisfied with this position. However, in the absence of a clear building contract, and in the absence of a clear line of responsibility amongst the professionals, Mr McGlinn's room for manoeuvre was somewhat limited. He decided, not for the last time, that the right thing to do was to appoint a new adviser.
- Accordingly, in June/July 2001, Mr McGlinn appointed Mr Tanner to act as his representative. Mr Tanner had been the captain of one of Mr McGlinn's boats and had known him, and worked for him, for a long time. It was clear that Mr McGlinn trusted him to look after his interests. Mr Tanner then became involved in endeavouring to ensure that Maison d'Or was completed to Mr McGlinn's satisfaction. He agreed that he became Mr McGlinn's "eyes and ears and mouthpiece". He said that one of his main functions was to provide "the instructions, decisions and answers" on site which, according to him, both WL and Waltham were asking for. He accepted in cross-examination that one of his functions was to give instructions on Mr McGlinn's behalf. Mr McGlinn, too, agreed that Mr Tanner was there "to instruct them of my needs".
- During the cross-examination of Mr McGlinn, it was suggested to him that Mr Tanner's appointment coincided with a significant change of mind on his part as to what he wanted Maison d'Or to look like. It was suggested that, by 2001 at the latest, Mr McGlinn wanted Maison d'Or to look more like the Sandbanks house and that changes were then made to try and achieve this. To the extent that that suggestion is pursued by HTA, I reject it. It does not seem to me that the instructions being given by Mr McGlinn, through Mr Tanner, amounted to a major change of design concept on the part of Mr McGlinn. I do not believe that there was any intention to change the architectural idiom at Maison d'Or.
- It appears that Mr Tanner's first meeting was in July 2001 with WL and Waltham. HTA were not present. Mr Tanner made notes of the matters which needed attention, trying to hurry things along towards completion. Thereafter he made various inspections of the property. Indeed, in November alone, Mr Tanner carried out at least two extensive inspections of Maison d'Or in the company of Mr McGlinn. Mr McGlinn made clear to Mr Tanner those items with which he was dissatisfied on a room-by-room basis.
- One of the complaints which surfaced at this stage, really for the first time, was the point that the interior and finishes were not to the boat standard. Mr Tanner produced notes of those items with which Mr McGlinn was unhappy and passed them onto Waltham; by this time, one of Mr McGlinn's concerns was that, in his view, Maison d'Or "was not the same quality as a luxury yacht". At this late stage in the progress of the original works, Waltham had not offered up any part of the building for handover, and neither HTA nor DJH had produced any snagging or defects lists at all. In his cross-examination, Mr Tanner accepted that, as a result of his role at that stage, he was having direct dealings with – and issuing instructions to – Waltham, without reference to either WL or HTA.
- However, it appears from the documents that not even the presence of Mr Tanner could resolve all the longstanding problems on site. For example, in their letters of 16 October 2001, 7 November 2001 and 9 November 2001, Waltham complained that Mr McGlinn regularly failed to attend meetings (despite his promises to do so) which meant that decisions on particular outstanding matters could not be taken and had to be deferred. It is clear that frustrations were building on all sides.
- At this time, as Mr Thornton put it, "the contractor was still working towards passing it [the building] over to us for snagging". However, as he confirmed, at no time before Waltham left site in January 2002 did they "actually offer the building up for snagging". Furthermore, at the same time, WL were apparently making relatively modest deductions from sums otherwise due to Waltham on account of defects in the work which had been pointed out and discussed by Mr Thornton and Mr Richards.
C13 The Departure Of Waltham
- On 4 December 2001, Waltham wrote two important letters. The first responded to Mr Tanner's lengthy list of items that needed to be dealt with following his visit on 23 November. Waltham claimed that 33 of these items required an instruction from HTA to proceed; that they were, effectively, variations.
- In their second letter, Waltham complained to HTA that practical completion had not been certified. It appears that Waltham accepted that not all of the works that they had been asked to do were practically complete, but they argued that all of the original work scope was complete and that any outstanding matters related only to the extensive variations which they had been instructed to carry out. They seemed to envisage some sort of qualified Practical Completion Certificate which is not provided for in the JCT form and is, on analysis, a contradiction in terms. Moreover, Waltham's stance was not an easy one, even by reference to the original work scope, given that they had at no stage offered up any part of the building to HTA for handover and snagging. In addition, in the absence of a signed contract, it might have been difficult to differentiate between original work scope and variations in any event.
- Mr Thornton reiterated in evidence his view that, because Waltham had not even handed over the building for snagging, there was no question of certifying Practical Completion (see also Section E3.8(d) below). Mr Tanner wrote to HTA on 7 December to reiterate Mr McGlinn's "strong concern that, in his opinion, this stage [Practical Completion] has not yet been reached." It therefore appears from the evidence that, at this point, neither Mr Thornton, nor Mr McGlinn, nor Mr Tanner, considered that the building was practically complete.
- Waltham produced an interim valuation application in November, which was valued by WL and certified by HTA on 6 December 2001. According to the contract, the certified sum of £68,350 became due no later than 27 December 2001. The sum was not paid and, on 27 December 2001, Waltham served a default notice pursuant to Clause 28.2.1 of the contract and seeking payment in 14 days. On 4 January 2002, Waltham suspended work and on 11 January they purported to terminate their employment under the contract. The outstanding sums were then paid by Mr McGlinn following the issue of a statutory demand. It now seems clear that Waltham's notices of 4 and 11 January were issued prematurely.
- On this basis, Mr McGlinn's then solicitors, Eversheds, wrote to Waltham on 23 January, pointing out that the notices were invalid and amounted to a wrongful repudiation of the contract, which Mr McGlinn accepted. Waltham's express offer to continue with the works was rejected completely, and they left site the next day, making a video of the conditions as they then existed. Waltham never returned after 24 January, and to all intents and purposes, no further work was carried out at Maison d'Or. The house stood empty, unheated, unventilated and rather neglected, for the next three years. It is HTA's case that this exacerbated, and even caused, some of the defects about which complaint is now made.
- There was no evidence about the advice (if any) given to Mr McGlinn by Eversheds concerning the consequences of accepting Waltham's repudiation of the contract, and rejecting their offer to complete the outstanding works. In the context of this dispute, that is not an unimportant matter; it has been said, with some force, that much of this case results from the simple fact that the building was never actually finished. The risks inherent in refusing to allow a building contractor to complete his work are well known to those who are involved in construction disputes; there is no evidence as to the extent (if at all) to which Mr McGlinn was advised of those risks by Eversheds when he decided not to allow Waltham to finish the works at Maison d'Or, and to accept their repudiation instead.
C14 The Investigations By Charter
- Charter were the architects who had been instructed by Mr McGlinn to provide architectural services during the construction of the property at Sandbanks: see Section C5 above. In March 2002, they were appointed to inspect Maison d'Or, record the defects and enable the necessary rectification works to be carried out: see Charter's letter to Mr Tanner of 21 March 2002.
- The principal tasks of inspection and report-writing were carried out by Mr Wheeler of Charter. Mr Wheeler did not give evidence. He produced an Initial Site Report dated 25 March 2002 which was rather like a snagging list. Mr Tanner added his own comments: he accepted in cross-examination that he made no criticism in these comments about the idigbo, the reconstituted stone, or the painted render, all of which are now allegations made by Mr McGlinn in the Scott Schedule. On 17 May 2002, there was a meeting at which Mr McGlinn was present, together with Mr Tanner, and three representatives of Charter. At that meeting, the question of the boat standard finish was raised by Mr McGlinn. It was Charter's stated position that "to get this standard you need to employ a specialist". In the typed minutes of this meeting, the point was expanded, with Charter making it clear that when, in respect of the Sandbanks property, Mr McGlinn referred to the need for a boat finish for all the works, they immediately realised that this was a standard of finish that was not normally obtainable on standard construction in the UK and that boat-building specialists would have to be employed to carry out much of the work (see paragraphs 47 and 48 above).
- Notwithstanding this, it is clear that in the March 2002 report, and the subsequent discussions, Charter approached Maison d'Or on the basis that HTA had received the same instructions from Mr McGlinn on Jersey that they had for the Sandbanks property. As Mr Dobbs of Charter put it, "the benchmark was Sandbanks".
- Following this meeting, in July 2002, Mr Wheeler produced a much more extensive defects schedule, which was the origin of the Scott Schedule used at the trial. The vast majority of the defects were identified as matters of bad workmanship on the part of Waltham. Further, almost all of the items were internal. There were just four pages of external items. Mr Dobbs said that the investigation which gave rise to this schedule was intended to be as exhaustive as possible. Therefore, it is important to note that, as the cross-examination of Mr Dobbs made plain, a number of critical allegations in the subsequent Scott Schedule were not mentioned at all in Mr Wheeler's July schedule. They included Items 1.1.1, 1.1.2, 1.2.1, 1.2.2, 1.2.3, 1.2.5, 1.3.3, 2.1.4, 4.1.1, 10.1.1, 10.2, 10.3.2, 10.3.3, 10.3.4 and 10.4. I accept Mr Bartlett QC's submission on behalf of HTA that these Items include some of the most important which HTA now face, and would not have required any opening-up in order to be discovered.
- Of particular significance was the omission of Item 4.1.1 of the Scott Schedule which is concerned with the alleged inadequate quality of the slates. The allegation against HTA turns on whether or not, during Mr Thornton's periodic inspections, they should have noticed the pyrites stains on some of the slates. HTA's defence was that there was no sign of pyrites prior to January 2002. In such circumstances, the content of Mr Wheeler's July 2002 Schedule was important, because it was the best evidence of what could be seen at Maison d'Or by an architect, inspecting for defects, some 6 months after the work had come to an end. Mr Dobbs accepted that Mr Wheeler had looked at the slates (because he noticed and recorded that several slates were broken and needed replacing) but either he did not notice the pyrites or did not consider that it was a matter worth commenting upon. Mr Dobbs suggested that an even more thorough investigation might have been needed in order to appreciate that there was an issue of pyrites.
- With the assistance of a contractor called Drew to perform opening up works, Charter carried out a further investigation between 19 and 23 August 2002. A further report was then provided. This led to a revision of the defects schedule of July, which now identified photographs of some of the typical defects. This did include a first reference to the pyrites. At least some of the items in the revised schedule could fairly be classified as snagging items; there was a major dispute (as demonstrated in the evidence of Mr Dobbs of Charter) as to how widespread such items were, and whether in truth, many of the items were more significant than mere snagging. It was accepted by Mr Sey that these opening up works exacerbated water ingress into the property.
- On 9 September 2002 there was a further meeting between those advising Mr McGlinn. One of the points noted at that meeting was the "deterioration due to building standing empty". Mr Dobbs said that the concern was that Maison d'Or had been sealed up, and really needed to be properly ventilated whilst the building dried out, a point echoed by Mr Sey of Charter during his cross-examination. Mr Holt agreed that the closing up of the property when it was drying out was a serious mistake. In addition, it does not seem that any attempt was made to stop water ingress in the few places where it was occurring. There was also further discussion about the boat standard and what Mr McGlinn thought that he was getting originally. Following that discussion, Charter were not asked to do any further investigations until well into the following year. Thus, between September 2002 and July 2003, very little happened at the site.
- On 10 January 2003, there was a meeting attended by Mr Tanner, and the representatives of Charter and EC Harris, the quantity surveyors/costs consultants appointed by Mr McGlinn. At this meeting, it is clear that Mr Tanner was passing on specific instructions from Mr McGlinn. These included potentially significant changes to the design of the existing property, such as a requirement for slimmer window timbers and larger areas of glass. As a result of this meeting Charter prepared a 'Schedule of Client's Requirements' which talked, for instance, about the possible redesign of the windows and reducing the timber section sizes.
- On 22 July 2003, there was a meeting at Charter's offices attended by a variety of Mr McGlinn's new team, including Roger Jowett, from Bickerdike Alan, his architectural expert, and Mr Raper, his solicitor. Although there are minutes of this meeting, they are not always easy to follow because much of the document has been redacted, apparently on the grounds of privilege.[4] There is a draft management structure in respect of the remedial works. It is perhaps worth making the point that no such diagram could have been drawn to demonstrate the management structure on the original project (see Section D below).
- During the discussion about the appropriate remedial work, there is the following minute:
"3.3 Although a 'start again' remedial option may appear to be proposed option in some cases, the repair solution needs to be properly considered giving reasons why its implementation would not be effective."
In his cross-examination of Charter's Mr Dobbs, Mr Bartlett QC put it to Mr Dobbs that this minute indicated that, by this stage, Mr McGlinn and/or his new professional team were leaning firmly towards demolishing Maison d'Or and starting again and that, accordingly, care was going to be needed to explain how and why the repair option would not be effective. It seemed to me that that was the only fair reading of the minute, a point with which Mr Dobbs agreed. Mr Sey also agreed that he could see "why it would be read like that". On the basis of that evidence, and given the redaction of much of the preceding minute, I find that the only fair inference to draw is that, even at this stage, demolition and rebuilding was already the preferred choice of Mr McGlinn, and that the information-gathering and report-writing exercises were to be carried out with this end in view. That would be consistent with his wish to have significant elements of the house, like the windows, completely redesigned.
- Such a finding is also consistent with the email from Mr Dobbs of Charter, to Mr Sugg of E. C Harris of the previous day (21 July 2003) which talked about Mr McGlinn's desire for through-colour render which "might be technically feasible given the external joinery is to be replaced". Mr Sugg confirmed that this meant that, even at this stage, a decision had already been taken that all the external joinery would be replaced.
- There was also a further discussion about the question of quality at the meeting on 22 July. Minute 6.6 reads as follows:
"Quality – Benchmark was tabled as one of the client's boat (Tigre D'Or) however it was also highlighted that a vessel joinery project is different from joinery installed in a construction environment. Any 'higher than construction site' standards imposed on this project would naturally be at a financial premium."
Whilst this passage was talking about the standard of the proposed repair or rebuilding of Maison d'Or, it seems to me that this comment would be equally applicable to the original works carried out by Waltham: again see paragraphs 47 and 48 above.
- Between 2003 and 2004, a full-scale opening up operation took place at Maison d'Or, including the complete stripping of the roof, and the construction of a lay-by at the side of the property to facilitate the works. These were known collectively as "the enabling works", although Mr Holt agreed that only the lay-by could truly be called enabling work; the rest of the work was concerned with the investigation and recording of what was found at the building.
- Four points arise from this extensive programme of works. The first concerns its scale. Mr Jowett said frankly that he considered that more opening –up work was done than he considered necessary. I respectfully agree with that view. At least some of the opening up work seems to me to have been unjustified on any view of the evidence of defects or damage as it then existed. Mr Sey of Charter said that he had never before taken a house apart in this manner. Mr Sugg of E. C. Harris confessed that "I have never known a contract like it", and he was the project manager.
- The second point concerns the purpose of the enabling works themselves. It is usual, in cases where an employer is concerned about defects in a new or refurbished building, to open up in those areas that have given rise to the original concerns. For example, if there are leaks below a proprietary roofing system, parts of that system will be opened up to demonstrate whether the roof joints have been properly made, and so on. But here, considerable opening up works were authorised in areas where there was no, or very little, reason for Mr McGlinn's team to have even a reasonable suspicion about the work that had been performed. One example that I take is the roof. It appears that between 2003 and 2004 the entirety of the roof covering was stripped off, which involved about 10,000 slates on 19 different roof slopes. And yet, as Mr Sey and Mr Holt of Charter both accepted, there was no evidence that there was one single leak through the slates. Such extensive opening up work was therefore, on the face of it, both exceptional (which everyone agreed) and, depending on what was found, potentially unjustified.
- Mr Sey originally said that one of the principal purposes of the enabling works was to help Mr McGlinn to decide whether Maison d'Or should be repaired or demolished. Clearly, some of the enabling works, like the construction of the lay-by, did not fall into this category in any event. And, more widely, it is difficult not to conclude that the focus of Mr McGlinn's team – and Charter in particular - was on finding defects, even in areas where there had been no problems and no signs of damage. Thus, by 2004, as these extensive works continued, I consider it unlikely that Mr McGlinn's team thought that repair of a building that they were pulling apart so thoroughly was a likely option.
- The sheer scale of the so-called enabling works can also be measured in monetary terms. The enabling words, including the £171,543.70 paid to Charter, cost a total of £687,320.36. That is to be compared with the (largely agreed) maximum base cost of the repair works for all the alleged defects (excluding on-costs and fees) of just £870,066. It is very difficult to justify spending £687,000 in order to decide whether or not to spend £870,000 on remedial work. Mr Sey agreed that it seemed "an enormous amount of money to spend", and that, if the purpose of the enabling works was to decide whether to repair or rebuild, the figure was "unreasonably large". Perhaps as a result of this answer, Mr Sey then went on to accept that the main purpose of the enabling works was to obtain and preserve evidence to be used in court proceedings against the Defendants.
- The third issue arising out of the extensive enabling works concerns how they were performed. I am in no doubt that those works were done carelessly, with no real regard for the materials being removed, and no real thought given to whether or not the elements concerned could be re-used. In a lengthy passage of cross-examination, Mr Bartlett QC put to Mr Jowett a number of the stills from the videos which demonstrated the careless way in which the extensive opening up work had been done. Mr Jowett quite properly agreed with the generality of the points that were put to him. He agreed that the opening up caused "a considerable amount of damage". It is impossible to reconcile the destructive way in which this work was carried out with a real desire on the part of Mr McGlinn and his team to repair, rather than demolish, the property.
- The final point arising from the opening up confirms the previous three. It arises from the minutes of the meeting held on 2 October 2003, which was immediately before the opening up commenced. Charter had prepared a document called 'Scope of Works Overview' which said that, in respect of each defect, where the remedial option was unclear "the more onerous remedial option has been selected". Mr Sey of Charter was asked about this in cross-examination:
"Q: So we see from the sentence about 'the more onerous remedial option', that your approach was to assume the worst situation and the most onerous remedial option where there was any lack of clarity?
A: Correct ... the underlying situation was that at some point this building had to be made good and that we had to ensure absolutely that any work that was done on the building was successful."
It seems to me that, again, this approach – 'ensuring absolutely' - was likely to make the demolition/rebuild option more, rather than less, likely.
- A further point should be made about the Scope of Works Overview document. In relation to the individual Items in the existing Schedule, it purports to draw a distinction between remedial works on the one hand, and enhancement works on the other. I note that, at that stage, the proposed change to self-coloured render (Item 1.1.2) and the proposed change from stone to granite (Item 1.2.1) were both considered as an "enhancement". Other alleged defects in the present Scott Schedule are also identified in this document as enhancement rather than remedial works.
- The contractors chosen to undertake the enabling works were Camerons, although there was no tender process. During the opening up works, there were meetings at which the condition of the building was considered in some detail. These meetings were sometimes minuted, and again the minutes confirm that the emphasis was rather more on the demolition and rebuilding option than repair. Thus, for example, the minutes of the meeting on 4 November 2003 at Camerons' offices referred to the under floor heating and the tests that had been carried out on it. The minutes noted that the feedback from those tests was that "the under floor heating cannot sustain an argument for taking all of the heating out". Mr Sey accepted that, again, he could understand why that minute would appear to show that Charter and the rest of the team were trying to find reasons for wholesale replacement rather than repair.
- The enabling works continued throughout the winter of 2003 – 2004. Unhappily, this meant that the roof was stripped during the worst of the weather. Mr Sey accepted that was a strange time of year to have chosen for those particular works.
- Another feature of the enabling works was the production by Charter of six different kinds of record sheets, recording every kind of potential defect. This data underpins the Scott Schedule in the litigation. Mr Sey said that he had never prepared documentation like that before. He agreed that the reason for the works, and the monitoring system, was 'to create and preserve evidence for the legal proceedings'. Many of the sheets themselves were prepared by Mr Holt of Charter, whose only previous experience of working on a luxury house was at Sandbanks, and who had never before assessed a building for a defects claim.
- On 5 July 2004, Charter produced a report which identified the defects and the different remedial options. It appears that the report was based, at least in part, upon other material for which privilege has been claimed. The report was expressly designed to demonstrate that, in respect of particular elements of the construction, the cumulative effect of the matters complained of was such that a point was reached whereby the right remedial scheme was, in fact, to demolish and rebuild the element in question. As Mr Dobbs put it, "we look at the cumulative effect of one defect on to the next in terms of what [remedial works] might be appropriate". As an example, section 1.1 of the report dealt with the external walls. The numbering is again similar to the Scott Schedule used in the litigation. Item 1.1.1 dealt with the coping detail; Item 1.1.2 was the paint finish; Item 1.1.3 was the paint application; and Item 1.1.4 was the render. Those are all Items alleged against HTA. The report does not recommend that, in respect of those four particular defects, the walls would have to be taken down and rebuilt. Instead, piecemeal repairs were suggested.
- The next Item in the report was Item 1.1.5. That was concerned with allegedly inadequate wall ties. It is not an Item alleged against HTA, either then or now. Having dealt with that Item, the report then stated that partial/piecemeal removal of the external leaf in order to install further wall ties was not an appropriate course and that therefore, in all the circumstances, the walls had to be demolished and rebuilt. The same approach was recommended in respect of all the subsequent Items in Section 1.1 (Items 1.1.6-1.1.8), which are again not alleged against HTA. Thus, on the face of the report, it was only those Items which are not alleged against HTA that tipped the scales to justify demolition and rebuilding.
- The Charter report of 5 July 2004 dealt with the demolition/rebuilding option on the one hand, and the repair option on the other. The report made it clear that "the process does not make any judgments concerning the financial viability of the remedial works. The solutions offered are purely driven by the process of arriving at a practical and pragmatic solution to the defect". Mr Sey of Charter accepted in cross-examination that Charter did not weigh up the relative advantages of one solution as against the other, and made no recommendation as to what Mr McGlinn's decision should be when the cost information was taken into account. Accordingly, the relevant material has to be read as part of a two-stage process: the Charter report dealing with the defects and the remedial options, and the EC Harris report comparing the costings.
- A point which arose on a number of occasions was the advice that was given to the effect that the remedial solution was riskier than the demolition/rebuild, because there was a risk that, if the works were confined to repair, other defects might be identified during the repair process. Whilst it seems to me that this was a risk, I am not persuaded that, in these particular circumstances, it was of great significance, particularly as Mr Sey accepted that, in view of the extensive and intrusive investigations that had already been carried out, the chance of a serious but as yet undiscovered defect emerging during the repair works was relatively small.
- The Charter report recommended rebuilding. As noted previously, in Mr Sey's witness statement, he qualified that recommendation by saying that "the final decision would be driven by cost and cost certainty". In essence, that was a reference to the separate E.C. Harris report on the figures. That report advised Mr McGlinn that, although the demolition/rebuild option was more expensive than the repair option, there was not very much in it. Of course, that was the advice then; now, as perhaps might have been anticipated, the rebuild option is valued at £1 million plus more than the agreed costs of repair.
- To complete the story, a week after the main Charter report, on 12 July 2004, Charter produced two further short reports, one dealing with an outline of proposed construction works, and the other setting out the scope of salvage, removals and demolition work.
C15 The Decision To Demolish
- It seems that, some time in August 2004, Mr McGlinn decided to demolish Maison d'Or. The precise circumstances in which that decision was taken are shrouded in mystery, which is most unfortunate given the importance of the decision itself in this litigation, and the admission by Mr Sugg, of E. C. Harris, that a decision to demolish a new house would require 'strong and exceptional circumstances' to justify it. Mr McGlinn confirmed that there was no meeting and no minuted discussions relevant to the making of the decision; he agreed that there was no letter, and certainly no reasoned analysis, setting out what factors he had taken into account in deciding to demolish. The decision itself was apparently communicated orally to Mr Raper, Mr McGlinn's solicitor, who passed it on to Mr Sugg, the Project Manager in respect of the enabling works at Maison d'Or. He then told the rest of the team by way of an email dated 18 August 2004.
- It is most unsatisfactory that so little is known about the basis for the decision to demolish. For example, Mr Sugg of E. C. Harris was obliged to admit in cross-examination that he did not know when Mr McGlinn made it and, rather more importantly, he did not know on what basis Mr McGlinn had made that decision.
- According to Mr McGlinn's solicitors, a large number of reports, gathered together in trial bundle G15, were considered by Mr McGlinn in coming to his decision. However in his cross-examination, Mr McGlinn appeared to accept that the only document to which he paid any serious attention was the Charter report of 5 July 2004 (paragraphs 132-135 above) and the costing information produced by E. C. Harris (identified at paragraph 136 above). Mr McGlinn made clear in his cross-examination that he was not a great reader of reports and that he expected to have the relevant points explained to him orally. He did not read any of the reports by himself. Accordingly, it seems to me most unlikely that Mr McGlinn had regard to the full lever arch file worth of material in bundle G15, and much more likely that he simply scanned, or had explained to him, the contents of the Charter report of 5 July and the E.C. Harris costings based on that report. I therefore find that that was the principal material on which Mr McGlinn relied when he decided to demolish the building.
- It does not appear that Mr McGlinn had in mind any structural or mechanical and electrical matters when he decided to demolish. Mr McGlinn was taken through the Charter report and it was demonstrated that it contained no engineering criticisms at all. In cross-examination by Mr Whitting, Mr McGlinn was asked whether, on that basis, it was right to say that the reports of the engineering experts formed no part of the decision to demolish. Eventually, there was this exchange:
"Q: Mr McGlinn, it was your decision to demolish the house, was it not?
A: Yes, of course.
Q: I think you will agree it was a drastic step to take, was it not?
A: The whole thing has been a drastic step, but I had to take it on the reports of my experts and the advice.
Q: You keep repeating, Mr McGlinn, that you take experts' advice.
A: Yes.
Q: But you have also confirmed to me that you did not take into account any advice that you were given by your engineering experts, did you?
A: No, I did not."
- This conclusion is also borne out by the evidence of Mr Sey of Charter, who produced the report of 5 July. He expressly accepted that, in his report, he had not relied on any engineering issues in making his recommendation to demolish and rebuild. Still further, I find, on all the evidence, that there were in fact no engineering matters which could possibly have justified demolition.
- One point that needs to be made at this stage concerns the advice from Mr Jowett, Mr McGlinn's principal expert witness. It appears that Mr Jowett did give some general advice about the advantages inherent in demolition and rebuilding, as against repair. However, Mr Jowett never gave any advice to Mr McGlinn, or anyone acting on his behalf, to the effect that Maison d'Or should be, or must be, demolished.
- Following the announcement of Mr McGlinn's decision to demolish, Mr Sey of Charter lost no time in suggesting a number of changes to the design of the new (rebuilt) property. Mr Sugg, the recipient of the document in which these proposals were first set out, agreed that he was suggesting some 'quite radical changes'.
- It appears that the decision to demolish was implemented in February – April 2005. For reasons which again are not entirely clear, no detailed drawings have been prepared for a new building; no planning permission has been obtained for a new building; and no tenders for a new building have yet been sought. There was even an argument about what the new building will look like, because, although E. C. Harris' Project Execution Plan of June 2006 emphasised the importance of "contemporary finishes … stainless steel and glass", Mr McGlinn said in evidence, in an echo of his principal complaint against HTA, that he did not think that this is what he had asked for. Sadly, therefore, ten years after Mr McGlinn bought the site, Maison d'Or is a foundation slab waiting for something (it is not clear what) to be built on top of it.
D. THE UNCLEAR AND UNRECORDED CONTRACTUAL RELATIONSHIPS BETWEEN THE PARTIES
D1 The Conventional Position
- Under a modern construction contract, there are certain documents and procedures which are generally regarded as critical to a satisfactory outcome. Some of these critical features are noted below.
D1.1 The Employer's Requirements/Design Brief/Specification
- Some forms of construction contract, such as the JCT (With Contractors Design) Form, require a document to be prepared entitled the Employer's Requirements. This document is designed to make it plain to the contractor precisely what the employer requires. These documents are often prepared by the architect; they are effectively a written record of precisely what the employer wants the finished building to achieve. Even in a contract where there is no contractor's design, and therefore no need for a contract document formally entitled 'Employer's Requirements',